Economist Erik Andersen, writing at The Common Sense Canadian, contemplates why BC Hydro:
indulged in its aggressive contracting with Independent Power Producers in BC when domestic demand increases are nonexistent.
I suggest you read through Andersen’s material, then consider whether or not a small number of corporations, enabled by Gordon Campbell and the BC Liberals, scored what might be the largest fraud in Canadian history, malefaction that will amount to billions of dollars over time.
Ruination of BC Hydro could only have occurred by thoroughly planned subterfuge or mismanagement of epic scale. I believe the experience of David Cobb provides a strong clue that the former is true, not the latter.
Cobb had been a highly respected executive before appointment as BC Hydro CEO, a position he left after only 17 months. Many believe that Cobb was unhappy that government interference prevented him from addressing serious problems. An internal conference call among BC Hydro staff disclosed Cobb’s position about Liberal government strategy related to BC Hydro:
If it doesn’t change, it would be hundreds of millions of dollars per year that we would be spending of our ratepayers’ money with no value in return…
Indeed, Cobb’s prediction has come true in 2012. BC Hydro is forced to purchase high cost private power while it shuts down its own generators and spills water from its reservoirs. Electricity they could have produced at almost zero marginal cost is replaced in the power grid with power costing hundreds of millions.
Erik Andersen explores the financial destruction of British Columbia’s public utility. Don’t miss the article linked at the top.
Let’s take a look at the record. In 2000 total assets were $11.596 billion; by 2011, assets had ballooned to $19.479 billion. In 2000, total liabilities were $9.320 billion; by 2011 they too had ballooned to $16.599 billion. If one were to add the yet-to-be-collected amounts held in the “Regulatory Assets” accounts (money we owe as ratepayers) that BC‘s Auditor General discovered, BC Hydro would be negative equity, more liabilities than assets.
Had there been a matching increase in demand it would make some sense but in the chart below you can see that has never been so. For several years the unanswered question has been: How could financially literate people steer our crown corporation on such a perilous course? The enormity of this financial fiasco places the prized assets of BC citizens directly in harm’s way with no credible explanation as to why.